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the poorer people of the city of New York, have been coming in and drawing down their deposits. Many of them started with a substantial amount and have consistently drawn down over 2 or 3 years, until they finally liquidated it altogether. That has been the experience and that has been the source of some apprehension with savings banks during this situation. It was a happy thing that they

a had their money there. That is, in a sense, what savings institutions are for to provide means by which they may meet extraordinary situations of this sort; so that the tendency is rather to go out than to go ahead in the city of New York.

The CHAIRMAN. How about the demand for loans? Has that increased any?

Mr. LESTER. Most of the demands we have for loans are not from home owners, who perhaps have a lot or enough money to put in a substantial equity, all of which we would entertain if we had the money, but rather from sources of-I do not say altogether speculative sources, but from sources of commercial and, to some degree, speculative building. There is always a demand for that.

Going back to your question, Senator Barkley, with respect to the knowledge that we have about values; we never have enough knowledge about the supply with respect to the legitimate demand. The lending institutions, with all the problems they have, and the responsibilities which they bear out of this depression, are, and should be, cautious with respect to how much new money they put on new construction, unless they are reasonably sure that it is not going to increase vacancies in the buildings on which they already have commitments. But it is pretty difficult to get a clear picture, backed by real evidence, as to just what the facts are with respect to the need for new construction, in consideration of the legitimate demand.

I am satisfied that there is a great deal of property in New York City and everywhere around this country that can and should be rehabilitated, if we are going to be quite responsible on our commitments and constructive withal. The tendency of a great many of us is to run out of an existing building into a new one. If we have too much of that, of course, we leave the investment in the old one rather flat. But, answering your question, I think that with that very limited amount of demand on the part of people who want to build a home for themselves, and a substantial demand for various kinds of loans, if we had the money we would not know quite how far to go, because we are not quite sure, still, what the actual need

Have I answered your question, sir? The CHAIRMAN. Yes. Do you see anything in this bill that is harmful to the building and loan associations? The purpose is to be rather helpful to them, but someone stated the other day that it would put them out of business.

Mr. LESTER. In the city of New York there are not so many. Building and loan associations are not such a large element in the financing of real estate, although there are some very good building and loan associations there. My own feeling is that these mortgage corporations would undertake to fill a gap, if they are organized in New York—to fill in a position that is now vacant and has been made vacant almost entirely by the title and mortgage companies. Of course, you cannot get away from the fact that any agency in the lending business is relatively in competition with every other agency, I suppose; but it seems to me that they are designed rather to take up that element of the whole picture of the mortgage question, than to compete against my own institution. I do not mean to belittle our situation, because we are relatively large. The competition of any such constructive agency as that would not be felt by my institution but would rather be welcomed if it were organized and carried on on a fine, constructive basis. I am not close enough to the building and loan picture to say specifically that it would or would not be either harmful or helpful, but I am satisfied, as I said in the beginning, that we need to study this whole question constructively and find out what the entire machinery is to effectively carry forward a program of sound, reasonable, conservative investment in real estate and, at the same time, be constructive, in order that progress shall go on, as it should in every community, in the building and real-estate industry.

The CHAIRMAX. What is your judgment about the need for new construction ?

Mr. LESTER. As I say, I think I am prejudiced. I think any lending institution will be relatively prejudiced on that, because the institutions hold the bag of existing investments, and therefore it takes a good deal of courage, knowing such real estate as we do and having as many commitments as we have, to initiate the thought that there is a need for a large amount of new construction in this country, in consideration of our position. I think that demand would probably have to come from other sources that do not have quite as large commitments as we do. But I will say this. I have tried to keep open-minded on this and fairly intimate with it. My difficulty has been to be reasonably certain, on the basis of fact, as to just what the demand really is, in consideration of the existing situation.

The CHAIRMAX. Are there any other questions? If not, have you anything else to suggest, Mr. Lester?

Mr. LESTER. I think not.
The CHAIRMAN. We are very much obliged to you, Mr. Lester.
Is Mr. Liversidge here?



The CHAIRMAN. Mr. Liversidge, will you state your name, residence, and occupation?

Mr. LIVERSIDGE. H. P. Liversidge; vice president and general manager Philadelphia Electric Co.; chairman executive committee, Philadelphia Federation of Construction Industries; residence, Philadelphia.

The CHAIRMAN. Mr. Liversidge, you examined this bill? Can you give us any light on it? If so, we will be glad to hear from you.

Mr. LIVERSIDGE. Yes, Mr. Chairman. First, I want to state that I am in hearty accord with the requirements of the proposed legislation, but I want to add certain thoughts with regard to the experiences of Philadelphia in its rehabilitation program of last year and indicate, if I may, based on the experiences and observations that


we had, the need for the inauguration of the fundamental features of the bill: First, the rehabilitation or modernization program; the small-credit feature; and then the mortgage features.

Looking back over the experience of the Philadelphia campaign, we now realize that while, in general, it was successful in attaining the objectives that we set out to secure, we would have accomplished a great deal more had we had even a credit feature or had we had the opportunity of cooperation in securing mortgage money during that period.

I would like to indicate briefly, if I may, the results of the Philadelphia campaign. That campaign was inaugurated on January 3, 1933. You will recall it was one of the low spots in the business history of this country. It was carried on aggressively for approximately 45 days. We obtained, in actual pledges, a sum of approximately 2112 million dollars, secured from residents and businessproperty owners. Besides the total of 24,700 pledges, which came from property owners, there were, in addition, 3,700 pledges that came from business-building owners. I might split that up in another way and say that 77 percent of the total amount of pledges, or approximately $16,680,000 represented repairs and maintenance and remodeling. Six percent, or approximately $1,340,000, represented alterations; 8 percent, or $1,610,000, represented additions; and 9 percent, or $1,850,000, represented new building construction.

It is interesting also to note that in a check-up of the results, while there was pledged 2112 million dollars, a final check-up of results, in which we employed unemployed engineers and architects as well, showed that there was actually 231/2 million dollars' worth of work done. That was due to the fact that those who pledged in various amounts, when the work was actually started, discovered that they wanted to do some other miscellaneous work, and the costs in many cases ran above the original figures contemplated.

One of the most striking things was the improvement in labor conditions. I would like to read, if I may, an excerpt from the March report of the Pennsylvania Department of Labor and Industry, showing employment conditions in the larger cities in Pennsylvania for the months of February and March of 1933. This is the statement [reading]:

The increase in building construction, employment, and pay rolls, however, was confined to Philadelphia, all other areas reporting decreases. Employment by building contractors in Philadelphia increased 16.1 percent in March as compared with February and pay rolls increased 22.1 percent.

Their comment further was: This substantial improvement in building employment probably is ati ributable to the success of the Renovize Philadelphia Campaign.

Further comparison of Philadelphia with other cities in the State during this period indicates that total pay rolls in the construction industry of Pittsburgh showed a 10-percent decline in March over February, Scranton a 9-percent decline, Reading an 11-percent decline, and Erie a 32-percent decline.

The stimulation of business activities was quite pronounced; numerous examples which covered a wide range were in general evidence, including small hardware stores, house furnishing and upholstering shops, and, in particular, those engaged in house painting.

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I want to point out the fact, however, that that job, involving an actual release of capital, which went into the normal business channels, of 2342 million dollars, was secured without the slightest aid with regard to credit. In my opinion, therefore, I believe that if the Philadelphia campaign alone had' had the opportunity of offering a credit feature at that time the volume of business done during that period would have been approximately double, and that is based not upon an opinion alone, but upon a check-up, in which we knew that people desired to do certain things with regard to business and home improvement, but were unable to do it because they could not secure any credit facilities. We attempted during that period to develop some form of loan corporation, with the idea that if even 5 million dollars were available in the territory it might stimulate our program. We were unsuccessful in doing that because, during the major portion of that program, which occurred from March on, naturally Philadelphia was in about the same position as all other cities with regard to credit or loans of any kind from recognized financial institutions.

The CHAIRMAN. Do you know what the loss was on this 23 million ?

Mr. LIVERSIDGE. The only way I could express that, Mr. Chairman, is to say that that money was provided by the property owners, who paid for it from their own resources. Our loss, if you might call it such, was the cost of administering and following through the campaign which, in the Philadelphia district, amounted to about $40,000. Five thousand additional was used to pay for the services of engineers and architects and others who were engaged in a checkup to be certain that the work pledged had been done. I would say that not only did it result in a stimulation of business generally, with particular reference to the building industry—and by that I mean skilled labor, building contractors, largely the smaller contractors, and suppliers of building material-but you may understand that with 2312 million dollars released within a period of a few months, most of that money came directly through the ordinary business channels, and storekeepers, even of the smaller variety-not those directly connected with building supplies—had a very remarkable upturn in business for a brief period.

I would like also to invite your attention to the fact that the campaign was necessarily one in which all, or almost all, were volunteer workers. We had about 7,000 men and women.

I might say that the women's organizations did a very fine job. We regarded it as a sales job pure and simple, and I would


that this feature of this program must be looked upon on that basis. It is a selling job, in which the civilian groups throughout the country should be vitally interested-interested in their own community and interested in the fact that here they have an opporunity of stimulating business in their own territory.

We had the usual objections to the general plan. We had all the pessimistic features that are thrown around the inauguration of anything of that kind. I would say to you that the results of that campaign were so conclusive that even our financial institutions, at the expiration of the campaign, expressed at least the thought that if they had realized that it would produce the results that it did, some means might have been found to have aided it, so far as credit was concerned.

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I would like to close, therefore, by making this general statement. First, I believe that there is the gravest necessity at this time for giving business generally some assistance and some impetus. There is real necessity for an improvement in the psychology of people generally. This plan will, if administered properly, and if it receives the support of the civilian groups in the various parts of the country, undoubtedly aid materially to that end.

I would say, therefore, that the program and the features included in the proposed legislation are well-balanced insofar as a really permanent, constructive program is concerned. First, we do need the initial stimulus of something that will get our building construction, labor, and suppliers of material on the way to more successful business. That, I believe, the rehabilitation program provides. I would say, however, that if you are to stop there, and if the credit features are not applied, or the mortgage features are not included, you will find that there will be a general-shall I say, ballyhoo? There will be a quick stimulus, but there will be a resultant let-down at the termination of the rehabilitation or remodeling program.

With the credit feature incorporated, you will find that there will be continued a larger percentage of building construction and a larger volume, in point of dollars, than if that credit feature were not included.

Having started the program, therefore, on this small and miscellaneous building construction, then your important credit features in larger amounts, and the major features of this bill will, in my judgment, take the place of the initial spurt of, say, 6 or 8 months, and should provide the base on which we can see a continuing development of increased building programs in this country.

I am glad of the opportunity to express, in general, these thoughts, for they have been the result of our observations in the practical administration of a program in one of the major cities of the country. We know now that if there had been mortgage features available, even if the small credit features which are included in this bill had not been included, there would have been inaugurated in Philadelphia a building program which was estimated then at over $100,000,000, ready and waiting to proceed, but without the ability to do so, because there was no mortgage money available to carry on.

That completes my statement.

The CHAIRMAN. That is a very interesting statement. We are very much obliged to you.

The committee will endeavor to go on at 2:30 this afternoon. We will adjourn now until 2:30.

(Whereupon, at 1 p.m., Wednesday, May 23, 1934, a recess was taken until 2:30 p.m., of the same day.)


The committee met at 2:30 p.m., pursuant to the recess.

Senator WAGNER (presiding). The committee will please come to order. Mr. McAvoy, while other members of the committee are not present at this moment, some will certainly come in later, and others will read your statement and in that way will become acquainted with what you have to present.

Mr. McAvoy. All right, Senator.

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